A 3 percent sales tax on Alcohol and Marijuana, a five-cent fuel tax, and a seasonal sales tax were discussed at a special finance committee meeting on Monday. Assembly member Tom Morphet organized the meeting, hoping to present the taxes to Haines voters on the next ballot.
Only two of the proposals, the alcohol and marijuana tax and a seasonally adjusted rate will be considered at the assembly meeting on June 27.
Morphet proposed the special sales taxes, he said, in the midst of Governor Dunleavy’s state budget cuts. He said that the cuts have staggering effects on Haines, because the borough has historically relied on state funding. “We’re going to have cuts eventually. What we are losing is on a scale of magnitude big enough that this is just a starting point.” Morphet described the sales taxes as user fees.
“I’m a big supporter of user-fees. I think the people who are using services should be paying for them,” said committee member Josephson.
The 3 percent tax on alcohol and marijuana could go towards funding the police department, he said, which has overrun its budget by about $30,000 for the last two years. A five-cent tax per gallon of vehicle fuel, he said, could go into road maintenance and upkeep. “The bigger the car you drive, the more effects on the road you have,” said Morphet. Surplus costs for road maintenance have been borne by the tourism and economic development fund this year. A seasonal sales tax would generate more revenue from summer visitors, he said.
“I appreciate where the borough is at, in the need to take a different kind of look at its budget,” said Alaska Mountain Guides owner, Sean Gaffney. “But I don’t feel that there’s a comprehensive strategy to the taxes being considered.”
Committee member Stephanie Scott opposed the five-cent fuel tax and the seasonally adjusted rate, and Josephson opposed only the fuel tax.
Borough manager Debra Schnabel said that raising the sales tax by 1 percent in the summer would generate about $200,000 in revenue. “Even not having any sales tax in November or December, you will not really lose money as long as you have a higher rate in the summer,” said Schnabel.
Josephson said the aggregate of a seasonal sales tax, if rates were lower in the winter, would not be regressive. “I would really like to explore it further, and I think the voters would be more tolerant of that than some of this other stuff,” she said.
“I have a summer business that only operates in the summer time. It would definitely impact my business,” said Scott. She said that she and others spend the most money in the year during the summer for construction and other projects.
“You do shift a greater burden to the community in the summer time,” said Gaffney. “Are there other ways that that can be offset that that will be meaningful to the community?”
In a two-day survey of members of the Haines Chamber of Commerce, 53 percent of respondents were in support of a seasonal sales tax and 46 percent was opposed to it. “It’s pretty split and that actually surprised me,” said executive director Tracy Harmon.
On Tuesday morning, the chamber board said that their number one priority was for the assembly to consider cuts to the budget prior to increased taxation.
“They just want to tax and spend. They don’t even consider cutting,” said Mike Ward, owner of the Outfitter Liquor Store. Ward wondered why the borough wanted to increase sales tax, when sales tax revenues are already on the increase.
Between 2017 and 2018, the borough’s sales tax revenue increased by close to 10 percent, generating a total of $3.3 million in revenue.
“They’ve already got more money. They’re just taxing and spending, and trying to control growth by throttling it down with more taxes,” said Ward. “I think it’s going to affect local residents more than it’s going to affect local businesses.”
Ward said there may be some truth to the connection between alcohol use and greater levels of policing in Haines, but he said the burden was on government to cut its overhead.
Morphet said that he is supporting these increases to avoid increasing the boroughwide general sales tax, which he called “the most regressive sales tax that we have.” There is currently a 5.5 percent boroughwide sales tax.
Assembly members will continue to debate the seasonal sales tax and the alcohol and marijuana tax at an assembly meeting on June 27. Changes to the borough sales tax must be ratified by voters. For the taxes to be considered on the upcoming ballot, an ordinance will have to be introduced either by the assembly or an individual no later than July 18, to allow time for two public hearings.